Centrica, the United Kingdom energy group which owns British Gas, said it had concluded that its Rough storage facility off the Yorkshire coast could no longer be operated safely because of failures in its ageing wells.
The 32-year-old site - a reservoir of permeable sandstone under the North Sea into which gas can be injected at times of surplus supplies and drawn from when needed - accounts for 70 per cent of United Kingdom gas storage capacity.
Rough could cover a tenth of Britain's peak winter demand.
Britain depends on stored gas reserves to help manage winter energy demand spikes and to ensure security of supply.
"As a result of the high operating pressures involved, and the fact that the wells and facilities are at the end of their design life and have suffered a number of different failure modes while testing, Centrica Storage Limited [CSL] can not safely return the assets and facilities to injection and storage operations", it said.
The company said that an assessment of both the economics of seasonal storage, and the costs of refurbishment or rebuilding the facility and replacing the wells, suggested that neither option would be economic.
National Grid, which operates the United Kingdom gas transmission system, said in its annual winter outlook last week that it was confident there would be adequate gas supplies this winter despite the absence of Rough.
Advocates of fracking seized on the loss of Rough to press the case for exploiting United Kingdom shale gas resources.
The representative body for the UK onshore oil and gas industry, the UK Onshore Operators Group (UKOOG), said that the short-term solution for the UK would be to increase gas imports, mostly via ship, from places such as Qatar.
"Due to the age and condition of Rough we can no longer safely inject gas into the reservoir and build up the pressure in the well", a Centrica spokesman said.
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